Evelin Vatovec Krmac, Ph.d.

Abstract: Transportation logistics is not any more limited only to the movement of goods across spaceand reducing time and costs along the supply chain. Its scope has expanded and now it is influencingdecisions on what to produce, where to produce/store, in what quantities, who to choose for as thelogistics provider, etc., which are parts of strategic management. These improvements intransportation logistics are in great a part result of new transportation and information technologies.To take right decisions we need timely and accurate information and reporting environments. We haveto cope with a vast amount of business data (from disparate operating systems and applications),rapidly changing customer needs and market conditions, but also with a vast amount of hiddeninformation (documents, e-mails, know-how, voice records, external sources etc.). Therefore, we needintegration of our core business information system with a set of intelligent tools, intelligentinformation systems and modern analytical and artificial intelligence tools to discover relevantknowledge from all of these sources, to manage uncertainty, and to create and reach our businessintelligence as our main competitive advantage. In this paper the concept of business intelligence andsome artificial intelligence tools will be presented and their use in transportation logistics will bediscussed.

The streamline and optimization of business (logistics) processes and operations, minimization oftransportation costs, shortening of delivering times, lowering of product and service prices, improvingcustomer satisfaction, and maximization of supply chain technology have always been primary goalsof every business subject. As a result of globalization and integration of different economies, and theformation of international global supply chains and clusters their importance has increase further. Andtoday, in the period of recession, their importance has now reached the highest level. One of the most significant factors influencing the realization of these goals and way of doingbusiness and collaborating with trading partners effectively is information and communicationtechnology, which enables fast and reliable internal and external communication, permanent storing ofbusiness data and activities needed for current business and planning future business activities. Inuncertain environments, where data from external sources is needed for strategic planning, it is evenmore important that we know to explore all these data, process them in the way to produce knowledgeand find hidden patterns, relationships and correlations that help us in strategic decision making,forecasting trends and possibilities. These capabilities, related technologies and tools are seen as promising future technologies [3] andprerequisites to survive or beat the recession [5]. Business intelligence, data content, and dataknowledge are emerging technologies that are expected to have innovative potential in the next years. This paper on business intelligence in transportation logistics attempts to emphasize theimportance of integration of business intelligence with transport systems as an important element ofthe logistics system. The role of transportation logistics in the logistics system is discussed in Section2. An overview of business intelligence, how to implement it, and benefits we can derive from it, arediscussed in Section 3. Some of the most important applications of business intelligence in thetransport system are explored in Section 4. The paper concludes by highlighting some potential trendsof integration of business intelligence in transportation logistics and the future of business intelligence.

2. IMPORTANCE OF THE TRANSPORTATION LOGISTICS IN THE LOGISTICS

SYSTEM

The transportation system is the key element in a logistics chain because it provides links amongseparated logistics activities. If our aim is to take full advantage of logistics, we have to have a welldeveloped, efficient and effective transportation system. The influence of the transportation system onthe logistics system is the logical consequence of the fact that transportation generates one-third of theamount in the logistics cost. [11] According to the [2] the objective of transportation logistics, as one component of integratedlogistics management, is to compress time along the whole supply chain. It means a reduction ofdelivery time in shipments from suppliers of raw materials, intermediate goods and components tofactories, distribution of final products from factories to wholesalers, retailers and end users, and thedistribution of spare parts for after-sales services. Nevertheless, transportation logistics has ceased tobe limited only to the movement of goods across space and reducing time and costs along the supplychain. Its scope has expanded and now it is influencing decisions on what to produce, where toproduce/store, in what quantities, who to choose as the logistics provider, etc., which are parts ofstrategic management. These improvements in transportation logistics are in great part results of newtransportation and information technologies.

3. OVERVIEW OF BUSINESS INTELLIGENCE TOOLS AND TECHNOLOGIES

Definition of business intelligence

Summarizing numerous definitions of business intelligence we can say that businessintelligence is a set of intelligent (software) tools and systems that help (facilitate) a company to betterunderstand, analyze, explore and predict what is occurring in the company and also in the broaderenvironment. These tools and systems help the company to turn data, usually collected and saved indatabases, into useful and meaningful information, which is then distributed to those who need it,when they need it, wherever they need it for improved and timely decision making. BI tools also allowa company to see, use and combine large amounts of complex data from different sources - internaland external, normalized or denormalized, structured and unstructured, and to represent the integrationof these data in various reports and graphical 3D views. Business intelligence helps a company not only to monitor its operations by querying,analyzing, reporting, performing in-depth analyses of what is going on, what helps find and resolvepotential problems, identify and leverage new opportunities, predict and plan for the future, align theoperations with strategic goals. Indeed, “Business intelligence usually refers to the information that isavailable for the enterprise to make decisions on”. [1] Because of this it has become a synonym fordecision support. In addition, because of the fact that business intelligence is often (but notobligatorily) used with data warehousing it has also become a synonym for this term. However, datawarehousing only is a component for achieving business intelligence.

Business intelligence tools

Business intelligence tools are tools commonly used for implementing business intelligence.This does not mean that business intelligence tools are making non-trivial decision by themselves.“Decisions are made only and business intelligence is garnered only with the combination of theoutput of the business intelligence tools, human judgment and intuition, and the ability to put theinformation spit out by tools into a context of information that is much wider than any data warehouse,transaction processing system, knowledge repository can handle. [8] The term business intelligencetool represents software that enables business users to see and use large amounts of complex data. [7] The spectrum of business intelligence tools and functionalities is very broad. They differsignificantly regarding their cost, functionality, business intelligence complexity and number of totalusers. The most common business intelligence tools are as follows.Spreadsheets The most common, popular and used business intelligent tools are spreadsheets (or we can sayMicrosoft Excel files). The reasons for this are numerous: it is relatively cheap, easy to use, wellknown in the business area, it has/includes almost all functionalities that users need to display data,and quite all other reporting tools have export to Excel and Import from Excel. The most common useof Excel is reporting and goals tracking.

Query, reporting and data visualization tools

Answering predefined questions, a query tool offers to users a static view of information to beanalyzed, combined with information from other sources or exported for use with other tools. The nextgroup of tools are reporting tools that are either custom-built or commercial (the determinationwhether to buy or build a reporting tool has to based on a number of reports, the desired reportdistribution mode, and the need for ad hoc report creation). Reporting tools are more flexiblecompared to spreadsheets and enable each user to create, schedule and run their own reports. This isthe software that allows the user to ask (ad hoc) questions about patterns or details in the data.Visualization tools include a set of graphical tools, dashboards and scoreboards. The most commonapplication of visualization tools is the visual interpretation of complex data relationships thatfacilitate decision making.

OLAP tools OLAP (On-Line Analytical Processing) tools are used for multidimensional analysis (“slicingand dicing” of the data). They provide users with the ability to look at the data from a variety ofdifferent dimensions. OLAP means also “the use of computers to run the on-going operation of abusiness” [7]

Data mining tools

“Data mining tools predict future trends and behaviors, allowing business to make proactive,knowledge-driven decisions.” [9] A data mining tool is the software that automatically searches forsignificant patterns or correlations among different factors in the data using sophisticated statisticaland other techniques. It comprises various artificial intelligence tools and techniques like neuralnetworks, machine learning, genetic algorithms, decision trees, knowledge management, ruleinduction, information extraction and information retrieval systems and other. Core business intelligence technology (query, reporting, interactive analysis) is used to viewor analyze what is occurring or has already occurred (business operations reporting – weekly ormonthly reports), while data mining and predictive analysis allow users to predict what may occur inthe future (this ability can be a competitive advantage in today’s uncertain economy and global crisis).

The selection of appropriate business intelligence tools

Before we select an appropriate set of business intelligence tools for our business we have toknow our business intelligence needs. We have to decide what types of business intelligence tools wewould like to have, then choose a right vendor, and finally implement these tools in our business in theright way. When selecting a business intelligence product we have to consider a lot of important factors.Among them are specific product features, ease of use, ease of implementation and administration,scalability, user-interface options, the ability to access and integrate a wide variety of disparate datasources, strong search functionality, and how well it integrates into existing and future platformenvironment (integration with desktop software, operating system). [6] When implementing business intelligence we can choose to do it gradually or “all at once”.Gradual implementation means that we first implement tools for operational purposes like databases,reporting and analyzing tools, and when business users have become familiar with them and ourbusiness has grown up and expanded, in the second step we implement business intelligence tools fordeeper analysis, such as data warehousing and data mining. The strategy of implementation ofbusiness intelligence tools depends primarily on the funds at our disposal and also on the expertise orfamiliarity of business users with different software systems. Before choosing a set of business intelligence tools that are most appropriate for our company wehave to decide whether to buy or build them from scratch. According to various sources of businessintelligence knowledge [1, 6, 7] when making the decision of building or purchasing a reporting toolwe have to consider our requirements regarding the reports we need, the distribution mode of reports,and the need for ad hoc report creation. If there is a need for a high number of reports, then it is betterto buy a reporting tool because it already has a report management system which makes maintenanceand support functions easier. If users will access reports through a variety of different channels (notonly email or using a browser), then buying a reporting tool, that comes packaged with thesedistribution modes, is probably the right decision. If we have users that are able to create their own adhoc reports, then purchasing a reporting tool is a better decision.

4. BUSINESS INTELLIGENCE IN TRANSPORTATION LOGISTICS

In Section 2 we considered that transportation affects the results of logistics activities and itinfluences production and sale. Therefore, minimization of transportation costs and maximization ofservices to the customers are very important. The implementation or uses of business intelligence toolscan help in various ways to achieve these goals. Some of the applications of business intelligence intransportation business are listed below: Achieving a cost-effective means of transport. BI software can facilitate a fast and easy selection of the best means of transport considering a vast number of factors (the key factors to consider in selecting the means of transport are physical characteristics of the load, the number of loads to be moved, the distance to be covered, the required speed of movement, the required proof of delivery, cost of building/dismantling loads, packaging costs, space requirements, interface with other storage, transport and handling systems and housekeeping issues) and considering also historic data and past experience. Reducing transportation costs, increasing efficiencies, and improving customer service with route optimization – routing and scheduling. Route optimization software helps us route multiple vehicles (means of transport) simultaneously considering business rules regarding vehicle capacities, customer-committed time windows, vehicle costs, work day rules, pre-assignment of orders to vehicles and other. Cargo load optimization software helps us find the best loading patterns for the same shipments, select the best vehicle to match a given shipment, determine how many vehicles are needed for large shipments, determine the exact costs of shipments. Analyzing transport operations- routes can help us identify potential problems or inconsistencies in daily operations (or some departments), and compare costs of same shipments on different routes to establish the best one. Managing inventory efficiently and effectively by determining of the inventory level of a product or part. Managing orders efficiently and effectively to increase customer satisfaction. Recognizing trends and understanding how they affect the business. Evaluating the operations performed in the company (generating reports), evaluating strategic factors (internal and external) and identifying patterns of business and operational behavior (using data mining techniques). Identifying customers that are cutting back on their purchases so that special inducements can be offered to retain them. Implement dashboards and scoreboards so that executives and supervisors can quickly recognize operational exceptions or key performance indicators (KPI) that fall outside of accepted ranges. Some of the important KPIs could be planning accuracy, capacity utilization, resource utilization, load balancing, route utilization, scheduling accuracy, vehicle availability, vehicle loading time, average transit time, cost of transportation per ton, on time vehicle arrival, vehicle unloading time, order receipt accuracy, percentage of goods damaged, total order delivery time, on time deliveries, goods delivery rate, transportation costs and other. [3, 5] Establishing and monitoring performance metrics and taking corrective actions if we see they will not be met.  Comparing year-to-date sales for this year with last year and forecast sales for the entire year.  Tracking customer orders.  Integrating operational, spreadsheet, and historic data for analysis purposes to provide consistency for the organization.  Providing business users with the ability to perform their own ad hoc analysis and reports.  Aligning daily operations with strategic objectives and quickly recognizing when they are not in agreement.  Analyzing transportation means to verify cost-effectiveness.  Making independent analyses of marketplace transportation costs to determine if our freight rates are competitive and to negotiate lower transportation costs if we are outsourcing transportation services.  Forecasting economic and service impacts as consequences of changes in our transportation model, which permits us to find the optimal operating strategy.

5. CONCLUSIONS Today’s demands in doing business are increasing every day, regardless of what kind of business a company is involved in. Companies are facing with keen competition, with the need for reducing operational, product and service costs, the need for increasing functionality, flexibility and the ability to take (make) right decisions, based on information gained from operational and historic data, in right time. It is important that users are able to explore and analyze data, make different reports, but it is also important they can predict the behavior of customers, products and processes. Business intelligence tools are tools that can help users to reach all these goals – via querying, reporting, analyzing, visualization, uncovering patterns and correlations and relationships hidden in data. But, the real future of the business intelligence is in right use of these tools. They have to be guided and used by users who understand the business, the data, and the general nature of the analytical methods involved and are familiar with the software environments.